Northern Trust Asset Management (NTAM) has launched a strategy to efficiently target high-quality stocks and companies with higher relative environmentmal, social and governance (ESG) ratings while defining a responsible investment universe and managing climate change risk.
The NT World Quality ESG Strategy, which has been available in the United States since 2015, will be accessible to investors in certain jurisdictions across Europe and Asia-Pacific.
The strategy expands NTAM’s suite of responsible quantitative investment solutions, with a focus on quality companies and a strong emphasis on controlling risk.
“We believe material [ESG] factors are pre-financial indicators that can affect a company’s future financial viability and clients’ long-term risk-adjusted investment returns. When managed well, they can position a company for success and when mismanaged, they can result in significant risks,” says Julie Moret, NTAM’s global head of sustainable investing and stewardship. “The intersection of high quality and highly rated ESG and quality factors means investors in this strategy may benefit from both factor-based investing and ESG characteristics.”
The strategy enables investors to access a differentiated ESG integration that not only incorporates ESG metrics but also removes exposure to certain lower-scoring ESG securities, NTAM says. It seeks to reduce carbon footprint relative to the benchmark, with the existing strategy delivering a 64% reduction in carbon dioxide intensity and an 81% reduction in CO2 potential emissions as of March 31 2022.